A Consumer's Republic - How We Became a Consumers' Republic

2/10/2003

The rise of American consumerism has not come without hits to the social, political, and cultural landscape. But there have been unexpected benefits, too. Harvard University historian Lizabeth Cohen discusses her new book, A Consumers' Republic: The Politics of Mass Consumption in Postwar America.

by Sean Silverthorne, Editor, HBS Working Knowledge

Silverthorne: What do you mean by a "consumers' republic?"

Cohen: "A consumers' republic" is the terminology I employ in A Consumers' Republic: The Politics of Mass Consumption in Postwar America,
(read an excerpt from the book) for what I discovered was a shared understanding among many Americans, beginning right after World War II and lasting into the mid-1970s, that the best strategy for reconstructing the nation's economy and reaffirming its democratic values lay with promoting the expansion of mass consumption. Policy makers, business and labor leaders, along with many ordinary Americans put mass consumption at the center of their plans for a prosperous postwar nation. Not only would a dynamic demand-driven economy provide the best route to recovery and affluence, but it would also, they hoped, nurture the long-sought ideal of a more egalitarian and democratic nation. Citizens, living better than ever before, would be on an equal footing with their similarly prospering neighbors. So being a good citizen and a good consumer became intertwined.

Americans are still being told that their ownconsumption provides the best route to economic recovery.

 Lizabeth Cohen

I investigate the origins of this postwar ideal in the 1930s and World War II as well as its unfolding through the postwar era. I am interested in the infrastructure of public policies that supported the consumers' republic, such as the G.I. Bill, postwar amendments to the income tax, new availability of consumer credit, highway building, and other incentives to create the mass suburbia of the postwar era. I also look at the new "landscape of mass consumption" that emerged, built around the extensive building of single-family, detached houses in the suburbs and the regional shopping centers that became the new public space for the millions of Americans who migrated out of cities. And, as you can see from the excerpt included here, I investigate the shift from mass to segmented marketing, and how that innovation carried over to the practice of politics.

I also argue that dependence on the consumer market inspired grassroots political activism in the postwar period, such as the early civil rights movement's demand for access to public accommodations in the 1940s and 1950s and the consumer and environmental movements of the 1960s and 1970s. Finally, I examine the decline in that consumer movement and yet continued invocation of the consumer interest to justify the dismantling of many of the movement's legislative and regulatory achievements through privatization and deregulation from the late 1970s on.

Q: Do you see evidence of a backlash among consumers against the idea that citizenship and consumership are intertwined, perhaps embracing the notion that consumption doesn't always float all boats?

A: Although the heyday of the consumers' republic ended with the recession of the mid-1970s and the conservative turn in politics soon thereafter, Americans are still being told that their own consumption provides the best route to economic recovery. Soon after the tragedy of September 11, 2001, General Motors' advertising campaign articulated the plan of action that had already been launched with the Bush tax cut: Consumer spending would "Keep America Rolling." As the nation has struggled against recession in the year and half since 9/11, continued consumer spending has both been credited with buoying up the economy and been promoted as still necessary. Just witness the rhetoric of the last few months as we lived through the major shopping season revolving around the holidays.

I don't see much evidence that Americans are rejecting this invocation to consume for the good of oneself and the nation, only that financial worries are making it harder for people to comply. One of my arguments in the book is that our postwar society's dependence on private markets for solving social problems, like providing adequate housing and education to all, led to new kinds of inequalities in America, despite the egalitarian promises of the Consumers' Republic's founders. A real-estate-market driven housing policy and schooling dependent on the property tax revenue of local communities both contributed to new kinds of hierarchies within metropolitan populations. But those inequalities, along with the growing income inequality of the last two decades, do not seem to have affected the political attitudes and actions of Americansor at least voting Americansas much as one might expect. That is a fascinating mystery to me.

Q: Did the post-World War II shift from mass to segmented marketspotential buyers by age, race, sex, lifestyle and other characteristicsincrease the power of consumers in terms of determining what products would be created for them?

In some ways, the attractiveness of subcultures as marketsgranted them legitimacy,even authority.

 Lizabeth Cohen

A: I argue in The Consumers' Republic that by the late 1950s, manufacturers and advertisers had become greatly concerned over the potential saturation of the mass markets that had been so crucial to recovery after World War II. Instead, they predicted greater profits in identifying differentiated markets that could be sold different products or presented with the same products in ways that highlighted a particular group's unique tastes and interests. The definition of these segments and the evolution of market segmentation as a new approach was an interactive process, however, with potential consumers exerting decisive influences on marketers, helping to convince them that groups with increasingly independent identities offered new opportunities for cultivation as segments.

It was no accident that the rise of market segmentation corresponded to the historical era of the 1960s and 1970s, when social and cultural groups such as African-Americans, women, youth, and senior citizens began to assert themselves in a way that came to be called "identity politics," where people's affiliation with a particular community defined their cultural consciousness and motivated their collective political action. Marketers who, had they not been in search of new ways to avoid saturated mass markets, might have despaired at the splintering of the mass in the 1960s, soon seized the opportunities for selling it offered. As Russell Haley, vice president and corporate research director for D'Arcy Advertising in New York, argued, "it is easier to take advantage of market segments that already exist than to attempt to create new ones."

What it meant for members of subcultures to become the object of appeals from mainstream marketers is difficult to know. In some ways, their attractiveness as markets granted them legitimacy, even authority. Segmenting the mass market thus helped democraticize it, allowing subcultures to shape markets around their own priorities. For example, Tom Wolfe's The Kandy-Kolored Tangerine-Flake Streamline Baby (1965) tracked how automakers in the early 1960s in Detroit seized and mass marketed the translucent paint colors and super speeds of young California car customizers and southern stock car racers. On the other hand, when the marketplace geared itself to the unique cultures of segments, groups like these "custom car kids" who often had defined themselves in reaction to the mainstream, were now drawn further into the commercial market, and could at times be co-opted by it, even when they brought their own meanings to the exchange.

Your very good question forces us to bring business history and social and cultural history together, which is exactly what I try to do in my book.

Q: Is there a role for the business community in remedying some of the ills that you outline? To take a simplistic example, would society benefit by a retailer's decision to stay in an urban core location rather than move to a suburban mall?

A: I realize that retailers, like other businesses, have to make decisions that are financially responsible. But I would hope that my book points out that there are often social, cultural, and political implications of business decisions that those who make them may not be fully aware of. My hope is that by pointing out some of these unexpected ramifications, socially concerned members of the business community may seek remedies or at least think through such consequences the next time they face a similar decision.

My hope is that by pointing out some of these unexpected ramifications,socially concerned members of the business communitymay seek remedies or at least think through such consequences the next time they face a similar decision.

 Lizabeth Cohen

Let's take your example. I try to point out in my book that the migration of stores from urban downtowns to suburban shopping centers had many significant impacts on metropolitan areas. For example, cities were deprived of needed sales and property taxes, leading to declines in the quality of urban services and often a rise in tax rates for property owners. Urban residents, often of low-income and with poor access to transportation, lost nearby shopping and jobs and found themselves unable to get to shopping malls, since the malls promoted bus routes that brought people in from surrounding suburbs, not the inner city. And with shopping centers legally defined as private property, at least in most states, the freedoms of speech and assembly that Americans enjoyed on the city street and the town square did not follow them into the mall, despite mall managers' frequent claims that they were the new public spaces of suburban America.

Obviously, businesses cannot solve all these problems on their own. But their concern for freedom of speech and fairness of access, for example, can go a long way, and can even encourage political leaders to address these issues. Of course, businesses sometimes have diverging interests, depending on their size and markets. This Christmas season, the mayor of Denver, Wellington E. Webb, implored his fellow citizens to do their holiday shopping in city stores rather than over the Internet because local merchants and the city's sales-tax-dependent coffers were suffering from the surge in e-commerce. Here, the urban retailer was pitted against the Web retailer. Yet by raising this issue, Mayor Webb recognized the interconnected interests of the city and local storeowners. Building on that kind of collaboration can hopefully improve the climate for business as well as for citizen consumers.

Q: For readers who provide consumer goods or services, what do you hope they will take away from your book?

A: As an historian, my great hope is to help all readers see that the world we live in today is a creation of history, a product of real people having made decisions within certain economic and political structures and constraints. Likewise, the choices that readers make, whether as homeowners, consumers, retailers, advertisers, or voters, often have ramifications way beyond what they may be aware of at the time they are faced with a decision. That's the broad answer.

More specifically, I would hope that a provider of consumer goods or services would take away an awareness of the importance of consumers to their businesses' prosperity, but also the important role they as business owners and managers can play in creating a more fair and decent American society by responding to the concerns of consumersover safety, quality, prices, environmental impact, full disclosure, fair access, and so forth. If we as a society consider that consumers are fulfilling some basic obligations and have certain rights as citizens, then it is also the responsibility of producers and providers to hold our capitalist marketplace to the highest moral and civic standards as well. The bottom line must include more than a calculation of corporate profits. It must measure the extent to which social good and consumer goods have converged. That may be idealistic, but if the "business of America is business," then we have no choice.

· · · ·

Lizabeth Cohen is Howard Mumford Jones Professor of American Studies in the Department of History at Harvard University.

When in 1945 the New York Herald Tribune introduced the readers of its Sunday magazine to the exploding field of market research and what it was predicting about American consumer desires once the war ended, the paper stressed that the inquiry into "what you want" assumed a unified "you." Statements like "nine out of ten of you want," "three times as many of you hope; "most of you have decided" ran through the text. "The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio and TV set," and drives a car with only minor variations, Harper's Magazine concurred a couple years later. In the aftermath of World War II, mass consumer markets that delivered mass-produced goods to a wide swath of Americans seemed the best route to prosperity. By the mid-1950s an unprecedented number of Americans were participating in what chronicler Thomas Hine has called "one of history's great shopping sprees" to acquire multitudes of material goods in the style he has aptly labeled "Populuxe": fashionable and luxurious, yet affordable to many.

But how, marketers soon began to worry, could they ensure continued profits? As more and more Americans bought a house, car, refrigerator, and washing machine, wouldn't markets get saturated and consumption ebb? True, the baby boom was creating larger potential markets among, for example, those "happy-go-spending" young suburban families celebrated in Redbook magazine's promotional film, but their children would not become consumers in their own right until the late 1960s. Moreover, wouldn't a booming economy create more business competition along with more prosperous consumers? After all, the number of operating businesses had increased 45 percent between 1945 and 1959, according to Printers' Ink, a trade journal of advertisers, and that did not even take into account growth in foreign competition. Manufacturers and retailers all producing for the same mass market ran a serious risk of putting each other out of business. Already by 1956 marketing expert Wendell Smith, past president of the American Marketing Association and director of marketing research and development for Radio Corporation of America (RCA), was warning of the "recent ascendancy of product competition to a position of great economic importance. An expanded array of goods and services is competing for the consumer's dollar," intensified by advancing technology "creating competition between new and traditional materials." Recession in 1957 alarmed manufacturers and marketers all the more, casting the nation's sluggish economy since 1954 as the origin of a looming crisis.

Marketers invested in the promises of Populuxe experimented with a variety of remedies to stimulate demand. They developed new products for consumers to buy, making television sets, for example, more portable, larger screened, and, by 1961, capable of displaying color. They tried pricing sought-after goods like appliances at higher prices to bring in greater revenue. And most commonly, they encouraged product obsolescence by regularly changing the wings on cars, the colors on refrigerators, and the hemlines on skirts. "Basic utility cannot be the foundation of a prosperous apparel industry," B. Earl Puckett of Allied Stores instructed four hundred leaders of the fashion world in 1950. "We must accelerate obsolescence," he insisted, and over the decade the garment industry would prove itself a model, according to Printers' Ink. Industrial design as a profession had developed in the 1930s with the promise of redesigning the objects of everyday life. In postwar America, the practice and profession exploded together, and increasingly its Bauhausian-inspired mission to raise the aesthetic standards of the mass of Americanswhat visionary industrial designer Charles Eames in 1950 described as design "to bring the most of the best to the greatest number of people for the leasteasily fed into the strategy of planned obsolescence, with designers regularly restyling mass consumer goods. The head of styling at Ford, George Walker, explained the challenge: "We design a car to make a man unhappy with his 1957 Ford 'long about the end of 1958." His counterpart at competitor General Motors was even more ambitious: "In 1934 the average car ownership span was five years; now it is two years. When it is one year, we will have a perfect score."

Even as these innovations squeezed greater profits out of existing demand, they continued to assume the existence of a unified, often referred to as "middle-class" market where the mass of consumers shared a consistent set of Populuxe tastes and desires. As a study of Philadelphia department store customers concluded in 1950, "The leveling of incomes since 1940 has provided a great stimulus for stores to move toward the middle of the middle." Article after article in the trade publication the Journal of Retailing between 1945 and 1960 promoted the viability of selling to the "average consumer," frequently referred to as "Mr. or Mrs. Consumer," the same customer being targeted by the shopping centers popping up all over suburbia. To the extent that goods were aimed at anything but this average middle-class market, those markets were usually understood as steps along a continuum of "income groups" capable of more or less discretionary spending but unlikely to diverge much from the accepted set of consumer preferences.

When Wendell Smith warned of the growing danger of product competition in 1956, he proposed an alternative to mass marketing that made his article in the Journal of Marketing a landmark: market segmentation. He argued that in place of mass markets, goods would "find their markets of maximum potential as a result of recognition of differences in the requirements of market segments." As "many companies" are finding that "their core markets have already been developed . . . to the point where additional advertising and selling expenditures [are] yielding diminishing returns, attention to smaller or fringe market segments, which may have small potentials individually but are of crucial importance in the aggregate," Smith advised, can yield greater consumer satisfaction, continued profitability, and "a more secure market position." Two years after Smith's article, Pierre Martineau, a University of Chicago-trained sociologist and marketing director of the Chicago Tribune (long a leader in market research), elaborated the rationale for market segmentation in another groundbreaking article in the Journal of Marketing. Martineau attacked the prevailing assumption that "a rich man is simply a poor man with more money and that, given the same income, the poor man would behave exactly like the rich man," by insisting "this is just not so." A member of a market segment defined by social class or other criteria, Martineau argued, is "profoundly different in his mode of thinking and his way of handling the world.... Where he buys and what he buys will differ not only by economics but in symbolic value." From their different perspectives, Smith and Martineau together advanced a new axiom of marketing, whether applied to cigarettes or refrigerators: homogeneity of buyers within a segmented market, heterogeneity between segmented markets.

Although Smith and Martineau are officially credited in the annals of marketing with conceptualizing the modern notion of market segmentation in the late 1950s, it was not an entirely new idea. Before the Second World War, different industries had begun to take variation in consumer tastes into account at different times. The first major success has usually been attributed to General Motors' assault on Ford's unchanging Model T in the late 1920s, promoting annual model changes and some customer discretion within that. But in keeping with how mass markets themselves were understood to be divided in the era before widespread market segmentation, by differentiating more between products than users, General Motors and other early segmenters tended to vary their products to appeal to different "price classes," income groups that, like the indistinguishable poor man and rich man rejected by Martineau, were separated more by ability to buy than by taste. For example, when in 1940 GM surveyed 10,000 prospective buyers about their interest in an early version of the automatic transmission, the Hydra-Matic Drive, income level was assumed to be the decisive factor. It would not be until Smith and Martineau in the late 1950s, followed by scores of other marketing innovators, espoused the new concept of market segmentation that segments would emerge as unique markets to be sold substantially different products.

By the time Thomas Robertson of Harvard Business School published his marketing text, Consumer Behavior, in 1970, he would conclude a key chapter with the statement, "The basic dilemma, in summary, is whether to adopt a policy of market segmentation or aggregationwhether to build generalized or ambiguous appeals into a product so that consumers can perceive it as they choose, or whether to concentrate on a specific segment, thus deliberately excluding a given proportion of consumers. Will 80 percent of a small market segment produce more revenue than 10 percent of a mass market?" The thrust of his bookand other writing of the erawas a resounding "yes." Note that although Robertson still entertained a mass market option in 1970, he acknowledged sufficient variation in consumer preferences to urge mass marketers to fashion "generalized or ambiguous appeals."

By the 1970s, with the success of historic campaigns such as PepsiCola's "Pepsi Generation" challenge to mass-marketed Coca-Cola, market segmentation had become the indisputable rule in marketing and was well on its way to achieving ever-greater dominance and sophistication. A survey of medium-size and larger Fortune 500 firms in the mid-1960s concluded that already by then most manufacturers were incorporating the market segmentation concept into product development and sales. The family-owned cosmetic company of Estée Lauder, for example, began segmenting in 1965 by adding to its core products a new male line of Aramis toiletries, soon followed by Clinique for young women, Prescriptives for older, wealthier, more professional women, Origins for men and women interested in natural, environmentally responsible products, and, finally in 1991, Prescriptives All Skins for darker-toned, minority women. Likewise, department stores and the shopping centers they anchored increasingly shifted their marketing strategy during the 1960s and 1970s away from selling to the "middle of the middle" toward catering to segments defined by age, affluence, and lifestyle, in the process drawing sharper distinctions between themselves and their competitors. Retailers were finally heeding advice offered by a farsighted Martineau back in 1957, the same year that he wrote his classic article on social-class segmentation, that retailers must develop more store "personality," or "image," to fill a particular "niche in the marketplace," not try "to be all things to all people." BusinessWeek, in taking stock of product marketing at the start of the seventies, concluded that the "breakout of consumers by age group, income, education, geography, ethnic background and use patterns" through "selective selling or market segmentation" had accelerated to such a degree that the the terms 'mass market' and 'mass media' have almost become misnomers."

The move from mass to segmented markets promised greater, steadier profits through expanding the pool of potential consumers: A wider variety of products, each tailored to a specialized population, would create more buyers in total and less cutthroat competition to win them. The shift from mass to segment had consequences, moreover, not just for merchandising but also for the political culture of postwar America more broadly, as its influence spread. How, then, did marketers and advertisers come to shift ground so decisively between 1945 and 1970? And what brought about this reconceptualizing of mass markets as discrete communities of consumers with distinctive needs, wants, and product preferences?